I wish I’d never bought these 2 FTSE 250 shares!

So far, 2023 is off to a positive start for global stock markets. At FTSE 100 up 5.5% this year, while in FTSE 250 it is ahead of 6%. In the US, the S&P 500 has gained 6.3%, while tech-heavy Nasdaq Composite the index has increased by 12.6%.

Two FTSE flops

Not all stocks have done well lately. For example, in the second half of last year, my wife and I bought three FTSE 250 stocks for our new family portfolio. Unfortunately, the two stocks were flops.

Failure #1: Jump Line

When I worked in the financial sector from 1987 to 2002, I was greatly admired Direct Line Insurance Group (LSE: DLG), business and management models.

This well-known insurer, founded in 1985, is using technology to disrupt the motor and home insurance markets in the UK. Now, it also sells business, life, pet, and travel insurance.

In June 2022, my husband bought shares in this company at 200.3p. For a while, stocks rose. Unfortunately, the stock collapsed on January 11, down 23.5% after the group suspended a cash dividend to strengthen its balance sheet.

The move went down well with shareholders, with CEO Penny James leaving on January 27. Here’s how Direct Line’s stock price has fared over several periods:

With shares down more than two-fifths in 12 months, it’s no surprise the DLG boss fell on his sword. In addition, the five-year decline in prices has more than halved the Direct Lines dropped from the FTSE 100 to the FTSE 250, where it remains.

We invested in Direct Line to produce a bumper dividend, but this cash payment has been withdrawn. In addition, with bad weather claims since the ice explosion in December, the group’s earnings guidance has been withdrawn.

Even if the dividend is canceled, my wife and I will keep this struggling stock for now. In a few years, things could be even rosier for Direct Line. And we buy for long-term potential, not short-term volatility.

Failure #2: International Distribution Services

International Distribution Services (LSE: IDS) is the new name for Royal Mail Group. However, I really don’t like this clunky new moniker for a 507-year-old household name.

I’m also a bit annoyed with the IDS management team. Since August 2022, postal workers have been on strike for 18 days to get better pay and working conditions. It has generated £200m in group profits, but no deal has been negotiated.

As mail delivery continues to decline, the company’s international logistics business (GLS Group) works well. But until IDS directors and union leaders agreed a new pay deal, GLS’s success was overturned by Royal Mail’s problems. The group’s annual losses could be £350m to £450m. Ouch.

At a current share price of 234.4p, this FTSE 250 stock has fallen 46.8% in one year and 57.2% in five years. But the share price is almost 35% above its 52-week high of 173.65p on October 14 (and 10% up in 2023). So, for now we will stick with this weak stock, despite the concerns about the IDS management team!